If you have been following the progress of Indy Eleven, you probably know that the team’s management had initiated a request to the state legislature to use projected tax revenues to acquire suitable land to construct a professional soccer stadium that would seat 18,500 spectators — a stadium owned by the team. Indy Eleven owner Ersel Ozdemir was asking for a $60 million subsidy over a 30 year period towards a proposed $87 million total cost. The $60 million would be paid out of sale tax revues in a predesignated Indianapolis sports development area. However, after going through the House Ways and Means Committee and then being attached to an existing bill, Mr. Ozdemir decided to withdraw the proposed plan. One of my readers, Ms. Ruth Shaw, felt that on the surface the plan looked very sound and reasonable and she wished to know what, if anything, was wrong with the proposed plan and why it failed in its first attempt.
The Indy Eleven will be competing in the North American Soccer League. The NASL was formed in 2009 and started playing regular season games in 2011, so it is a relatively new enterprise. The Eleven’s home games will be played at Michael A. Carroll Stadium on the IUPUI campus and all but one of the 14 home games will be played on Saturday evenings. Preseason ticket sales have been robust, which does show that there is local fan interest in professional soccer.
Indy Eleven claimed that the team would generate $51 million a year in ticket sales which would generate $5.1 million in yearly tax revenues. Financial experts felt that this projection was way out of line for what could reasonably be expected in taxable income from ticket sales, particularly from a newly created team playing in a league that is only a few years old. The Legislative Services Agency, an independent group which advises the state on financial matters studied the proposal and projected that it would only generate about $2 to $3 million of tax revenue a year rather then the $51 million claimed by the Indy Eleven management. All of the possible outcomes for the team and its profit potential were presented by Mr. Ozdemir in a “best case scenario” and apparently legislators didn’t have enough time to thoroughly investigate the proposal. There is a widespread feeling that the team might be putting the cart before the horse with this initiative. It’s also important to remember that these monies would also come not just from Indy Eleven games but from taxes paid on concerts, sporting events, as well as food and beverage sales in the predesignated sports development area so other entities would definitely be involved in the financing. Before putting such a complicated financial scheme into motion, it would probably be a smart idea to see how the team performs in its present incarnation — and just as importantly, how the North American Soccer League performs. The League is only in it’s third year of existence and in truth is a minor league association. The chances of failure for the team and/or the league are high enough that a great deal of caution must be exercised, particularly when using public money. Taxpayers could very easily be left footing the bill for the stadium if the team is forced to fold. And there are many questions left unanswered regarding how the team arrived at the amount of tax revenue that they would be generating.
Another problem for the proposal was that it was attached to an already approved bill related to the Fort Wayne Coliseum. The bill was considered non-controversial and was going to easily pass until the soccer stadium rider was added. To say that Northern Indiana legislators were upset about this turn of events is putting it mildly. David Long, the chairman of the House Ways and Means Committee is from Fort Wayne, and pointed out the opposition from many state legislators in both the House and Senate. Andy Downs, a political science teacher from IUPU-Fort Wayne understated the resentment many Northern Indiana officials felt toward Indianapolis for trying to “muscle in” on the Fort Wayne bill. In the end, the Indy Eleven proposal was withdrawn by Mr. Ozdermir, at least for this legislative session. Many experts in both government and finance feel that the proposal in its present form raises more questions than answers and much more work needs to be done on both its content and presentation before it can seriously be considered.
In the long run the proposal could be a good one. Professional soccer could go over in a very big way and the team may well become very successful, but before the taxpayers wade deeply into funding another sports franchise, they need to be shown a great deal more information about the team’s prospects for financial success than what has been shown to them by the Indy Eleven franchise. Here’s hoping that all goes well and that fans can enjoy professional soccer in Indianapolis, but for right now Carroll Stadium is a fine venue for the Indy Eleven to hold their games in. They are a long, long way from needing a brand new $87 million stadium and taxpayers shouldn’t have to foot the bill for any part of it.
The Indianapolis Star and Indianapolis Business Journal have both done in-depth studies of The Indy Eleven stadium proposal and it is from these studies that I sourced my information. Thanks to Tony Cook and Barb Bergoetz of the Indianapolis Star, and Anthony Schoettle of the Indianapolis Business Journal for all of the hard work. They are the reporters who got the story.